To all those reading this I am David Gibbs; I am a Lecturer in Law at the University of East Anglia.

I created this blog as a general out-let of ideas for my research, as well as keeping those interested up-to-date on my research and general interests.

I completed my PhD thesis at the University of East Anglia in 2014. The thesis was recommended for the award of PhD with no corrections. My external examiner was Prof. Simon Deakin (Cambridge) and internal examiner was Prof. Morten Hviid.
My PhD research centred on directors' duties and company law. The thesis was titled 'Non-Executive Self-Interest: Fiduciary Duties and Corporate Governance'. It was a doctrinal and empirical study on whether self-interest was suitably controlled amongst non-executive directors.

My supervisors were Prof. Mathias Siems, Prof. Duncan Sheehan, Dr. Sara Connolly and Dr. Rob Heywood

All opinions of any existing or future blogpost are my own. They do not necessarily represent the views of any of my associated institutions.
ORCID 0000-0002-6596-8536

Tuesday, 30 September 2014

Research Development Conference

Last Friday I went to and presented at the University of Hertfordshire's Research Development Conference. I gave a presentation on 'My three tips on using social media in research'. For those interested my presentation can be found here and my notes can be found here.

My three tips were to: 1) have a strategy; 2) have an audience/niche; and 3) have rules. These three tips are mainly aimed at allowing someone new to social media to use it to enhance their research by reaching a wider audience but they are by no means the definitive way to use social media as a researcher.

Tuesday, 23 September 2014

WINIR Symposium: Accepted Papers List Published

The World International Network for Institutional Researchers (WINIR) has published its list of accepted papers to its website. For my paper that I will be presenting on non-executive directors, the abstract can be found here. There is also a preliminary programme for the three day event. There will be between 80-100 papers presented as well as keynote speakers from Simon Deakin (Cambridge); Colin Mayer (Oxford); Ugo Pagano (Siena); and Philip Pettit (Princeton). 

Friday, 19 September 2014

I'm on Linkedin!

As well as being able to follow me on Twitter (@Gibbs_Law) you can now be a connection too on my Linkedin profile. To connect to my profile follow the link here

Wednesday, 10 September 2014

The Apple Watch and the Director's Fiduciary Duty of Loyalty

Some of you may wonder what the unveiling of the Apple Watch and the fiduciary duty of directors have in common. Well, it goes to the heart of the problem of many analyses that seek to identify the scope of a director's fiduciary duty of loyalty to its company. Academic commentators and the judiciary alike often attempt to define loyalty on the basis of the interests of the company. Two decisions in the Court of Appeal and High Court have done exactly that in recent years with differing degrees of effect. In Re Allied Business & Financial Consultants Ltd [2009] EWCA Civ 751 Rimer LJ held the director has an unlimited fiduciary capacity because the duty is not circumscribed by the company's constitution. Equally, in JD Wetherspoons plc v Van de Berg & Co Ltd [2009] EWHC 639, the judge held that there would be no breach of duty where a director of a company employed by JD Wetherspoons to find suitable land to build public houses diverted opportunities to purchase land to another company since the company diverted to was not competing. Both approaches are inconsistent with fiduciary law. The Apple watch demonstrates the problem with such analyses. How do we know if companies are 'competing'? What does 'competing' even mean? A wide approach says all companies are competing. But this is not to the point. The law has always been clear in respect of fiduciary jurisdiction that it is not the company's interests that circumscribe the duty but it is those interests the fiduciary takes responsibility for that does. Following the approach taken in JD Wetherspoons, there would be the danger of allowing a director to advance the argument that Apple does not make watches, therefore any opportunity to do so may be legitimately diverted away from Apple to another company. The opposite problem happens from the reasoning in Re Allied Business. The director may have limited responsibility within a company yet is required to suspend self-interest where opportunities present themselves that are of interest to the company, yet they never took responsibility for them. Anyone arguing that the court could look at company documents to see what the company is doing with the creation of wearable technology is missing the point but also that it will be met with resistance because information of that nature is quite clearly sensitive.

It is a relief that in JD Wetherspoons the director eventually passed the lease hold on to Barracuda who could be said to be competing with JD Wetherspoons. Also, in Re Allied Business the opportunity fell within the scope of those interests the director undertook responsibility for. Thus, the conclusions were right in the end but for the wrong reasons. 

Monday, 8 September 2014

Derivative Claims: Where are we Part III

After an initial surge of derivative claims after the introduction of the new statutory procedure, the cases have calmed seemingly more focused on whether the specific facts themselves should allow cases to continue rather than any substantive comments on the law itself. Some inferences may be drawn from the discretion by academic commentators and lawyers to ascertain when a claim would or would not be allowed but it seems observations from the court as to the operation of the procedure itself has dwindled. My Part I and Part II posts on 'where are we?' can be found here and here respectively.

In 2014 there have been two claims heard, one of which was an appeal to the Court of Appeal, the first to be considered at this level. The initial hearing in the High Court was Re Singh Brothers Contractors (North West) Ltd [2013] EWHC 2138 (Singh EWHC) and appealed as Singh v Singh [2014] EWCA Civ 103 (Singh EWCA). The second case to be heard this year was Abouraya v Sigmund [2014] EWHC 277. This case was considered under the old common law rules rather than the statute but a brief consideration is worthwhile. Unsurprisingly both cases were denied permission to continue. An updated table appears below of all cases now to be considered under the new procedure - Thus Abouraya does not appear in the table.

Of note from these cases: In Singh EWCA, the court made reference to the availability of another remedy. Hughes v Weiss [2012] EWHC 2636 was cited at [23] that in claims of this nature, the purchase of shares was not required and thus a derivative claim would be more appropriate. However, the court dismissed this as a reason to permit a claim to proceed since the remedy for a section 994 petition gives wide discretion to the court to rectify the position of the claimant if the petition is made out. Thus, it seems to clarify the decision in Hughes, where a claim was allowed even though another remedy was available because the nature of that remedy was not appropriate for what was being complained of. However, in Singh, the s.994 remedy could be adapted and order a purchase of shares, using court discretion, to rectify the position. This may raise questions in some circles as to allowing shareholders to obtain a purchasing order through a section 994 petition when the initial claim was based on a corporate wrong. It may be seen as a luxury afforded to shareholders but not creditors.

In Abouraya the primary consideration for denying permission to continue was that the claimant was trying to use his position as shareholder of a parent company to advance his position as creditor of a wholly owned subsidiary. The court said that to do so would be to grant a remedy not available to other creditors, see at [59]-[60]. This seems to reflect a position taken in Cinematic Finance Ltd v Ryder [2010] EWHC 3387 that a court will not allow a derivative claim to be used to side-step other rules or advance your position vis-a-vis creditor.

As well as these two company cases the derivative claim discretion was also considered in respect of a partnership, Partners of Henderson PFI Secondary Fund LLP v Henderson PFI Secondary Fund LLP [2012] EWHC 3259. In this case it was held that whilst the merits of a claim may be considered but no threshold needs to be met, the judge held that merits play little part in the courts discretion unless they favour one side clearly, see at [37]. This offers weight to my own argument that the courts need to find one solid reason to dismiss a claim they will tend to do so and that if the legal merits of a claim are weak they are unlikely to grant permission, albeit, as stated in Stainer v Lee [2010] EWHC 1539, it is not impossible. Reference here was again made to Hughes v Weiss that the availability of another remedy is 'plainly a factor to be taken into account when deciding whether there are special circumstances' at [39].

From these cases both Henderson and Abouraya had issues relating to conflicts of interests. However, Singh did not and is now 2 of 15 cases not to concern such a breach of duty.

With this new decision to give a breakdown of statistics of cases considered under part 11:
Claims permitted: 33.3%
Claims refused: 66.7% - this figure includes Fanmailuk.com Ltd v Cooper [2008] EWHC 2198 - case was adjourned rather than refused
N = 15

Breakdown: x% - refused claims only; (x%) all claims
Claims refused for no prima facie case: 0% - NB: Re Seven Holdings Ltd [2011] EWHC 1893 - court would have refused for no prima facie case if the procedure had been followed
Claims refused for mandatory bar: 44% (28%)
Claims refused at court's discretion: 56% (36%)
N = 9 (14) - Fanmailuk.com not included

Case Name
Dismissed For/Allowed
Significant Circumstances Considered
Dismissed at court’s discretion
Wrongdoer control
Cinematic Finance
Dismissed at court’s discretion
Majority bringing derivative claim; wrongdoer control; side-stepping insolvency rules
Case adjourned
Case adjourned
Dismissed at court’s discretion
Strength of legal claims; ratification; alternative remedy
Permission granted
Strength of legal claims; ratification; alternative remedy
Mandatory Bar
Weak legal claims
Dismissed at court’s discretion
Independent review of whether litigation was beneficial; strength of legal claims; alternative remedy; and benefit would be small
Permission granted
Failure of defendant to produce any evidence to the contrary; alternative remedy
Mission Capital
Dismissed at court’s discretion
Alternative remedy; little weight to a claim for wrongful dismissal of a director
Permission granted
Strength of legal claims; ratification; good faith; alternative remedy
Permission granted
Alternative remedy; matter of urgency case was brought to recover sums taken from the company without good reason
Seven Holdings
Mandatory Bar
Claims did not relate to a breach of duty, care, negligence or default
Mandatory Bar
No director would continue the claim if acting in accordance with s.172; fides of the claimant in question; s.994 more appropriate
Permission granted
Strong grounds that there had been a breach of duty; strength of legal claims; disinterested shareholders deceived in to approving the loan
Mandatory Bar
The impact an action would have on the interests of the employees; claim of little value compared to cost of claim; legal claims were not realistically arguable



Monday, 1 September 2014

WINIR Symposium Abstract Accepted

I have recently had my abstract accepted to present my research paper at next year's World Interdisciplinary Network for Institutional Research (WINIR) Symposium taking place 22nd-24th April 2015 in Lugano Switzerland. My abstract is posted below. I will be presenting some of my research findings from my empirical study in to self-interest amongst non-executive directors. Its aim is to serve as a rebuttal of sorts to cool claims that greater involvement from non-executive directors will lead to better governance.


The governance of a company in England consists of a single board of directors comprising executives and non-executives. Executives run the company on a day-to-day basis, whilst non-executives oversee and participate in monitoring and strategy. Legal rules and corporate governance structures often focus on how the interests of the executives can be aligned with the interests of the company. Research also considers how effective these are. However, seldom is the focus on potential self-interest amongst non-executive directors. Their role has increased, as has their remuneration, creating greater opportunity for non-executives to use their position for self-interested means. Multiple appointments are common amongst non-executives and are a central feature of the corporate governance landscape. Yet they may also be a form of perquisite consumption, taken for the personal benefit of the non-executive or used advantageously to benefit one firm over another. Using multiple appointments as a proxy for self-interest this quantitative study investigates the governance mechanisms that may be used to control self-interest and the effect that these appointments may have on the governance of the firm. Using data collected from FTSE 100 companies at firm level over a five-year period 2006-2010, the study focuses on aspects such as remuneration, equity and agency problems as possible influences on the taking of multiple appointments. The study reveals that increased fees result in a greater amount of external appointments, as does a concentration of agency problems. The study also reveals that whilst equity may reduce external appointments it may be an insufficient control on self-interest. The impact of the study shows that propositions for greater non-executive involvement to enhance governance in the firm needs to be balanced against the current lack of controls on self-interest. Without such considerations greater involvement may not have the intended consequences.